NBU to rely on own analysis of implications of individual permits for FX transactions
MOSCOW. April 24 (Interfax) - The National Bank of Ukraine on April 20 revised provisions regulating the procedure for granting special permits for foreign currency transactions, according to which the regulator will largely rely on its own analysis of the possible implications of such decisions.
"The National Bank will, in particular, take into account the compliance of special permits for FX transactions with its goals of ensuring macroeconomic, financial, and external stability, strategy for easing FX restrictions, transitioning to greater flexibility of the exchange rate and returning to inflation targeting," Ukrainian media reported, quoting a statement on the regulator's website.
The amendments were introduced by an NBU Board Resolution of April 19, 2024 on Amendments to the NBU Board Resolution dated February 24, 2022, which took effect on April 20, 2024.
The Verkhovna Rada on March 21 adopted a law enhancing the work of the Deposit Guarantee Fund for Individuals and which stripped the government of the right to request that the National Bank grant separate permits for a legal entities to conduct a cross-border currency transfers in transgression of the NBU's own restrictions. The law went into effect on April 19.
The Ukrainian government adopted resolutions on February 6 and 13 to approve requests to the National Bank that VF Ukraine, DTEK, Metinvest, Interpipe and Kernel be allowed to make payments to Eurobond holders and other foreign creditors from Ukraine. Supporting documents said such decisions would help maintain investor confidence, save foreign currency for the companies, many of which are major exporters, and ensure their more efficient and stable operation in the future. Experts estimate such requests at more than $1.8 billion.
The head of the International Monetary Fund's mission in Kiev, Gavin Gray, had written to the Ukrainian authorities, expressing his doubt that such an individual approach is consistent with the strategy for easing foreign exchange restrictions, approved by the National Bank last summer in fulfillment of commitments under the extended financing program or EFF. The Fund is also concerned about the fairly significant amount of potential payments and the possible impact of such decisions on Ukraine's upcoming negotiations on the restructuring of sovereign Eurobonds with commercial creditors.
The NBU has avoided a direct answer to the question about its readiness to grant the 15 government requests. The National Bank has indicated that it has taken note of them and will consider each application individually, but at the same time advocates a comprehensive approach.
"The NBU will also pay attention to the performance of the relevant business groups both before and during the crisis. This is essential to understand whether a separate NBU authorization is indeed critically needed for each individual company," the NBU has said in response to questions from Ukrainian media.